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La3100 lp5 lecture


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La3100 lp5 lecture

  1. 1. [UCC] LA3100 Lear ning Plan 5
  2. 2. [What is the UCC?]  Uniform laws crafted by the American Law Institute and the National Conference of Commissioners on Uniform State Laws  Purpose is to promote consistency in sales contracts in interstate commerce.  There are 9 chapters, called “Articles”, covering sales of goods, warranties, forms of payment, titles, leases and financing of goods. LA3100L P 5
  3. 3. Lear ning Plan 5LA3100 ARTICLE 1 [UCC]
  4. 4. [ARTICLE 1]  Provides definitions and general overview of the purpose and scope for all 9 Articles.  Extends general contract law to cover agreements made across state lines. [ 1–103]  “Agreement” distinguished from “contract,” to include express terms and implied conditions based upon course of conduct & usage of trade. 1 – 303.  Overall obligation to act in “good faith”: “honesty in fact and fair dealing. [ 1–201(b)(20)] LA3100L P 5
  5. 5. Lear ning Plan 5LA3100 ARTICLE 2 [UCC]
  6. 6. [ARTICLE 2]  Applies to transactions in goods;  Does not apply to security interests;  Regulates every phase of a transaction for the sale of goods and provides remedies for problems that may arise. LA3100L P 5
  7. 7. [WHEN TO APPLY ARTICLE 2]  GOODS: “All things movable and identified to the contract of the sale. See 2-105 of the UCC.  A good must be existing and one of the objects that is or will be exchanged. See 2-106(1) & 2- 501(1) of the UCC.  Article 2 regulates transactions between merchants and consumers and those solely between merchants are regulated by Part Two.  All transactions that are for more than $500 must be in writing. See 2-201(1) of the UCC. LA3100L P 5
  8. 8. [“HYBRID” GOODS COVERED?]  Majority rule: If the “predominant purpose” of the whole transaction was the sale of goods, Article 2 will be applied to the whole (if goods are involved, most courts apply Article 2)  Minority rule: Article 2 applies to the sale of goods aspect of the transaction only (problems arise in applying two different measures of damages) LA3100L P 5
  9. 9. [ARTICLE 2 WARRANTIES]  Express Warranty  Implied Warranty of Merchantability  Implied Warranty of Fitness for a Particular Purpose LA3100L P 5
  10. 10. [ARTICLE 2 WARRANTIES] Implied Warranty of Merchantability  When a person purchases a product from a merchant, the person can expect that the product is "merchantable" under UCC 2-314.  This warranty provides that goods are of a quality equal to that which is generally acceptable among those who deal in such goods AND are generally fit for the ordinary purpose for which such goods are used. LA3100L P 5
  11. 11. [ARTICLE 2 WARRANTIES] Implied Warranty of Fitness for a Particular Purpose  The seller knows, or has reason to know, that the buyer of the goods intends to use such goods for a particular purpose, and  The buyer relies upon the seller's skill in select or provide such goods. LA3100L P 5
  12. 12. [CONTRACT ENFORCEMENT Lear ning Plan 3LA3100 REMEDIES
  13. 13. [ARTICLE 2 REMEDIES]  For breach when seller fails to deliver: Direct economic loss, specific performance, replevin, refund  For breach when seller delivers non- conforming goods: Incidental damages, consequential damages, warranty damages LA3100L P 5
  14. 14. [ARTICLE 2 REMEDIES] LA3100L P 5 Incidental damages: • Result from the seller's breach. • Include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover, • And any other reasonable expense incident to the delay or other breach.
  15. 15. [ARTICLE 2 REMEDIES] LA3100L P 5 Consequential damages: • Include any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and • Injury to person or property proximately resulting from any breach of warranty.
  16. 16. [ARTICLE 2 REMEDIES] LA3100L P 5 • Compensatory damages: Puts the nonbreaching party in the monetary position that the party would have been had no breach occurred and the contract had been fully performed. • Equitable remedies: When monetary damages insufficiently remedy, specific performance can order the unique goods to be produced.
  17. 17. [ARTICLE 2 DEFENSES] A manufacturer or merchant that sells a product may avoid liability, if circumstances exist for a valid defense:  Assumption of Risk  Contributory Negligence  Comparative Negligence LA3100L P 5
  18. 18. Lear ning Plan 5LA3100 ARTICLE 3 [UCC]
  19. 19. [ARTICLE 3]  Regulates "negotiable instruments"  An unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (2) is payable on demand or at a definite time; and (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money . . . LA3100L P 5
  20. 20. [ARTICLE 3] Negotiable instruments are generally divided into two categories: 1. Instruments containing an order to pay (Ex: drafts and checks) 2. Instruments containing a promise to pay. (Ex. promissory notes and certificates of deposit) LA3100L P 5
  21. 21. [ARTICLE 3] Definitions:  Draft: drawer orders the drawee to pay money to a payee.  Check: draft drawn upon a bank. An instrument stating "Pay to the order of”.  Promissory note: promise by the maker to make payment to the payee at a specified time in the future or upon demand by the maker.  Certificate of deposit: is a promissory note by a bank or other financial institution in which the institution acknowledges that it has received money from the depositor and that it will repay the money, plus interest, as a set time in the future.  All negotiable instruments are subject to a Statute of Frauds requirement. LA3100L P 5
  22. 22. [UCC] LA3100 Lear ning Plan 4